- How financially fit is your non-profit organisation?
- Are its financial resources well managed?
- How healthy are your financial control systems?
This checklist will diagnose the health of your organisation's systems of financial management.
Financial Management Systems and Records in Chaos?
Right Systems: Right People
“If you think it's expensive to hire a professional to do the job, wait until you hire an amateur.” – Red Adair
CMDS has, over many years, found that failure to design, set up and maintain appropriate financial management systems or to appoint appropriately qualified and skilled finance staff from the beginning is a recipe for disaster, however good the programme, advocacy or campaigning work of the organisation is. Such failures have consequences for both internal management effectiveness and external relationships and result in a patch-up job later, when the gaps and negative consequences are already obvious and/or the need to correct multiple errors becomes apparent. We have found that the work to do this proves to be far more expensive than the implementation of strong systems and/or the appointment of the right people from the start.
In established organisations, we have seen a good system deteriorate into chaos in a matter of months after the appointment of an unsuitable or unsupervised finance person. We often see job adverts calling for finance staff who can work unsupervised or independently – while such staff may not have everyday supervision, their work should still be regularly reviewed by someone with the necessary competence.
We have much experience with NPO’s who come to CMDS at a time of crisis; for example, reports to funders are overdue, SARS is banging on their door, audits cannot be finalised etc. We often then find that the financial recordkeeping has become chaotic, haphazard, inconsistent and incomplete, to say nothing of the possible misappropriation or misuse of funds which may have gone undetected. It can take months and great expense to unravel the mess.
Every organisation (regardless of its size and track record) needs sound financial management systems and access to financial management expertise – the right systems and the right people!
Financial management responsibility is delegated from the governing body to the executive director (CEO or manager) of the organisation, but such directors often have little time for this function and/or feel out of their depth - remember that CMDS is available to assist you and to walk with you in the set-up and maintenance of effective financial management systems, including, if necessary, the recruitment, screening and regular independent checking of finance staff and systems.
Lack of effective financial management systems, controls and infrastructure may result in one or more of the following:
- Inability to account for, and report back to funders and supporters on, funds received.
- Disgruntled staff, funders and other stakeholders.
- Waste and/or misappropriation of resources (including, but not limited to, cash).
- Trouble with SARS and other creditors.
- Damaged reputation.
- An inability to carry out necessary financial planning and strategic financial thinking.
- Cash flow crises.
Do get in touch with CMDS so that we can help you assess if your organisation has the right systems and the right people.